Fannie Mae (FNMA)

[contrarian bull]

This is the end for common and Junior preferred. By the time F&F are ready to be released the accumulated liquidation preference will total nearly $500 billion. At that point the NWS is replaced by a 10% interest payment on that $500B which is $50B per year. They don’t make that much money so they can NEVER exit conservancy. Today’s agreement is a full taking of these companies in perpetuity. Stocks are now technically worth zero.

The only hope is the Supreme Court. If they affirm the 5th court the NWS is over and liquidation preference is zero.

The other good news is that this constitutes a new taking, and the court cases can start all over again. By 2028 we may find there actually is some value in the F&F common and preferred shares. So maybe not going to zero tomorrow?